[fabi470]

Hi David,

hope you are doing fine.

I am currently reading a book which consists from interviews wit top-traders such as Minervini, Zanger and Co..

There was one question, in which the 4 traders kind of disagreed: how to find stocks in combination with the right sector/ industry group.
There are 2 ways: - you could start to screen for stocks in an uptrend, that build a nice base, have at least XX avg. volume and so on - but they are all from different sectors and industries. And in a second step (i dont know, if they really care about that step, or if you can miss out on that one) they look, if the sector and / or industry is in a favourable position (i would call this approach bottom-up)

- the other possible way would be a top-down-approach: i will look for the strongest sector and / or group and only look there to find stocks with a good setup.

So, my question is, which approach do you prefer? Looking at the stocks first and then move on to sector /industry (=bottom-up)? Or first looking at sector / industry and only buying stocks from the "hottest" sector and / or industry? If you have a complet different approach, let me know that as well

Second question: is it the combination of a strong performing industry group in a strong sector? Or is the sector / the industry group more important to you?

Third question: i think i somewhere heard or read, that you should only buy stocks in sectors, that have currently a better RS than the S&P500 (e.g. Technology has 90RS and Financial 30RS  and the S&P500 a RS80, i would only buy technology stocks). Do you agree with that concept?

I would be very happy to hear from you!

Greetings from Germany!

"I do agree with the concept to only buy stocks in sectors, that have currently a better RS than the S&P 500, and is the a cornerstone of the Stage Analysis Forest to the Trees approach."

Thanks for your response! Just to make sure: you mean the sectors like XLE, XLF and so on, dont you? Or do you mean the industry groups? It confuses me a bit, as Weinstein jumps between industry groups and sectors